Daily Markets

• The dollar fell to a three-week low on Monday after data showed the U.S. economy is gradually slowing down with weaker-than-expected readings on manufacturing and construction spending, suggesting that the Federal Reserve is on track to start cutting interest rates later this year. Monday's data showed the U.S. Institute for Supply Management's (ISM) purchasing managers index (PMI) for manufacturing fell to 48.7 in May, from 49.2 in April, sliding as well from an 18-month high of 50.3 seen in March. In a research note, BMO pointed out that the U.S. manufacturing sector shrank in 18 of the last 19 months. Monday's ISM decline followed weakness in the Chicago PMI, Dallas Fed, Philadelphia Fed, and the Empire State manufacturing indexes. U.S. construction spending also slid unexpectedly for a second consecutive month in April, decreasing by 0.1% after a 0.2% decline in March, amid falls in non-residential activity. After the ISM and construction spending data, fed funds futures increased the chances of a rate cut in September to around 59.1%, according to LSEG's rate probability app, compared with around 55% late Friday. It was slightly below 50% earlier last week. The U.S. dollar posted its first monthly decline of the year in May, weighed down by shifting expectations on when the U.S. central bank will cut rates and by how much. The futures market is fully pricing in one rate cut of 25 basis points (bps) this year. In the euro zone, however, the European Central Bank is holding a meeting on Thursday and is seen as almost certain to cut rates. The comments from ECB officials will be in focus for traders along with economic projections as they assess whether the central bank will provide further cuts after Thursday in the wake of data showing a rise in euro zone inflation in May. The pound pared gains a little after Nigel Farage, who helped lead Britain's departure from the European Union, said he would stand as a candidate in next month's election and will lead the right-wing Reform Party. This is widely seen as a major blow to Prime Minister Rishi Sunak. In Mexico, the peso weakened on Monday after the ruling party declared Claudia Sheinbaum the winner of the presidential election by a "large margin" after polls closed on Sunday.

Gold – XAU

Gold on Monday made its intraday high of US$2354.59/oz and low of $2314.65/oz. Gold is up by 0.94% at US$2350.31/oz.

Technicals in Focus:

On the daily charts, gold trades higher than 20DMA (2197). If it drops below this level, it could lead to 2,100. The MACD is currently above the zero line and the histograms are showing an increasing trend, indicating that there may be upward movement in the coming sessions. The RSI is currently at 83.04, which is in the overbought region, suggesting there may be selling pressure in the next 2 to 3 sessions. The Stochastic Oscillator is also in the overbought territory but has given a positive crossover, indicating a bullish stance for intraday trades, but rebound in expected in all the overbought indicators.

Trading Strategy: Sell on Strength

Sell below 2350-2400 keeping stop loss closing above 2400, targeting 2320-2309-2300 and 2290-2277. Buy in between 2331-2277 with risk below 2277 targeting 2360 and 2382-2394-2405.

Silver - XAG

Silver on Tuesday made its intraday high of US$30.78/oz and low of US$29.75/oz settle down by 2.44% at US$30.70/oz.

Technicals in Focus:

On daily charts, silver is sustaining above 20MA (25.05), breakage above will lead to 23.73. MACD is below the zero line and histograms are increasing trend, bringing a bullish stance in the upcoming sessions. RSI is in the oversold region, indicating a sell signal for now. The Stochastic Oscillator is in the overbought region and gives a positive crossover to show an upside move for the intraday trade.

Trading Strategy: Buy on Dips

Buy in between 30.40-28.90, targeting 31.10-31.90-32.40 and 33.00-33.70-34.90 with stop loss should be placed on the breakage below 23.00. Sell in between 31.10-35.00 with a stop loss above 35.50 targeting 30.40-29.80-28.90 and 28.40-27.90-27.10.

Oil - WTI

Crude Oil on Tuesday made an intra‐day high of US$77.33/bbl, an intraday low of US$73.88/bbl, and settled down by 3.74% to close at US$73.89/bbl.

Technicals in Focus:

On daily charts, oil is sustaining above its 100DMA i.e. 75.37, a support level, and breakage above will call for 77.48. MACD is above the zero line and histograms are in increasing mode will bring a bullish stance in the upcoming sessions. The Stochastic Oscillator is in the overbought region, giving a negative crossover to confirm a bearish stance; while the RSI is in the neutral region, more upside can be expected to reach the overbought region, which is highly probable.

Trading Strategy: Neutral to Sell

Sell in between 75.00-79.20 with stop loss at 80.00; targeting 73.20-72.00-71.40 and 70.60-70.00. Buy above 73.20-70.00 with risk daily closing below 70.00, targeting 74.00-74.90-75.50 and 76.40-77.00-78.10.

EUR/USD

EUR/USD on Tuesday made an intraday low of US$1.0827/EUR, a high of US$1.0903/EUR, and settled the day up by 0.593% to close at US$1.0903/EUR.

Technicals in Focus:

On daily charts, prices are sustaining above 100DMA (1.0800), which becomes immediate support, a break below will target 1.0717. MACD is above the zero line and histograms are increasing mode, bringing a bullish view. Stochastic is in oversold territory, giving negative crossovers to the bullish outlook for intraday. 14D RSI is currently in a neutral region and giving no directions to consider right now.

Trading Strategy: Neutral to Sell

Sell below 1.0950-1.1100, targeting 1.0700-1.0640-with stop-loss at daily closing above 1.1100. Buy above 1.0860-1.0450 with risk below 1.0400 targeting 1.0845-1.0890 and 1.1020-1.1105-1.1145.

GBP/USD

GBP/USD on Thursday made an intra‐day low of US$1.2693/GBP, a high of US$1.2807/GBP, and settled the day up by 0.553% to close at US$1.2806/GBP.

Technicals in Focus:

On daily charts, prices are sustaining below 50DMA (1.2674) is becoming a resistance level. 14-D RSI is currently in a neutral region and direction is difficult to predict on an RSI basis. The Stochastic Oscillator is in oversold territory and gives a positive crossover to confirm a bullish stance. MACD is above the zero line, but histograms are increasing leading to movement.

Trading Strategy: Neutral to Buy

Based on the charts and explanations above; buy in between 1.2700-1.2050 with a target of 1.2760-1.2830-1.2890 and 1.2950-1.2990 with a stop loss closing below 1.2050. Sell in between 1.2760-1.2900 with targets at 1.2700-1.2670-1.2610-and 1.2500-1.2450-1.2360 with a stop loss of 1.2950.

USD/JPY

USD/JPY on Tuesday made an intra‐day low of JPY155.94/USD an intraday high of 157.46/USD, and settled the day down by 0.683% at JPY156.02/USD.

Technicals in Focus:

In daily charts, JPY is sustaining above 100DMA (137.57), major support on the daily chart. 14-D RSI is currently in the overbought region and chances of downward are expected based on RSI. MACD is above the zero line but histograms are in decreasing mode which might lead to downward movement. The Stochastic Oscillator is in overbought territory and signaling to sell as it has given a negative crossover to confirm a bearish stance.

Trading Strategy: Neutral to Sell

Sell below 157.00-159.00 with risk above 159.00 targeting 156.00-155.50-154.30 and 153.60-153.10-152.60. Long positions above 156.50-149.50 with targets of 156.90-157.50 and 158.00-158.60 with stops below 149.50.